Today, I’m going to teach you EXACTLY how to buy your first luxury watch and sell it for a profit, even if you have NO experience in this space.
Understanding these basic concepts will set your capacity to do future business at much higher levels, but what becomes big must start small.
After trading your first watch, there is no coming back.
You’re going to LOVE making that quick money…
Money that crypto guys only DREAM of making predictably, and consistently, over and over again…
Now, let’s get started.
STEP 1 – Understand Your Buying Power
How much are you willing to spend? (Stay within your comfort zone and only use disposable income)
Decide on the price range you’re going to invest in trading watches.
This shouldn’t be money your life depends upon.
Also – I always recommend using CASH, NOT credit.
Especially in the beginning, you have to be held accountable for the money you put into your portfolio.
As a general rule of thumb, I recommend starting with a minimum of $1,000, but if you have more available, even $5,000 will give you a lot more flexibility as a new trader.
STEP 2 – Discover The SIZING You’ll Be Okay Wearing
The best thing you can do is actually go and try these watches to understand what works best.
The WORST thing you can do is get a watch you think looks INCREDIBLE…
But when you try it,
It doesn’t fit your wrist, looks ridiculous, and it’s incredibly uncomfortable wearing it…
This is what we’re trying to avoid.
So go into a jewelry store (ideally one that sells multiple brands like Breitling, Rolex, Tag Heuer, Panerai, etc), explain to the salesperson that you’re interested in buying yourself a wristwatch, but aren’t sure what you like just yet. DO NOT BUY ANYTHING FROM THE STORE AT THAT VISIT. Just try them on, thank them for their time, and let them know you’ll think about what you want.
STEP 3 – Pick 2-3 Watches to Target.
You want to pick 2-3 watches that fit the above criteria, AND that will be liquid movers in the secondary market. If you’re not sure about the latter portion, it’s never bad to ask in the Watch Trading Academy members-only Facebook group.
Now that you chose your pieces, it’s time for the next phase:
Step 4 – The Research Phase
Things you want to learn about your watch:
- What year was it made?
- What colors did it come in?
- What are the variations of it?
- What are the ranges of values? (What are the variations lowest price and highest price?)
You can google this and search on sites like Chrono24 or eBay.
But you need to make sure the DATA IS VALID.
Most watches you find on these websites are not in stock, which makes the data invalid.
Making sure the data is accurate is actually really simple:
Call the seller and confirm the data is accurate, the watch is in stock and the price is right.
- Call 3-4 reputable sellers and use the data you gather to come up with target price
- BONUS TIP: You can also call them as a seller of the piece you’re looking to buy and see what they’ll offer for it.
Now that you have all the data and decided your targets, it’s time for the next phase.
Step 5 -Making an offer
At this stage, your job is to understand the margins of jewelers and dealers.
The average margins are between 20% and 60% (depending on the watch).
Jewelers will accept or reject an offer based on replacement cost.
What is their replacement cost?
If you’re buying the watch for $8k, and the replacement cost for him is $6k, he is going to accept the deal. Even if the potential sale price to a true retail customer is $10k.
But if it costs him $8k to restock that watch, he’s NOT going to accept your offer.
Here is where you have to use the data you gathered during the Research Phase.
Your offer should start somewhere between your lowest and highest price.
Start with your highest price, and take 20% off.
Then see if it still puts you around the lowest price or not.
If the lowest price is still there, then subtract from that an additional 20%, and that will put you in a new range that we call wholesale dollar.
Now, most people won’t sell wholesale, because they don’t need to.
At this point, you need to decide what risk factor is that worth to you.
One of the ways to PROTECT OUR PURCHASE (This is directly taken from Watch Trading Academy)…
Is to understand what we call the Buttom Cash Value (BCV).
Let me explain using an example:
Let’s say you’re buying a watch for $10k that you think you can resell for $12k.
After doing your research, you know any jeweler in the country will buy that watch from you today for $9k.
The difference between the purchasing price and the cash value for today is $1k.
While in your head you say: “Well, yeah, but I’m still risking $10k to make $2k.”
But… you’re NOT.
You’re parking $9k and risking $1k to make $2k.
That’s your liquidity index for today if you were going to get rid of the watch for $9k.
This puts you in a very easy place of saying: “Can I afford to lose $1k?” or “Am I willing to risk $1k to make $2k?”
Instead of – “Can I afford to lose $10k?”
This makes it easy to make a decision with a lot less fear and appreciate the risk involved in this trade.
Now, before you are making the formal offer, you need to check another extra risk most people don’t even think of.
Step 6 – Buy The Seller BEFORE SENDING PAYMENT
This means you are going to run a background check of the seller (LinkedIn, Facebook profile, website, how long have they been in business, do you know some of his contacts, etc.)
To VERIFY its REPUTATION and see if it’s trustworthy or not.
If there is even ONE red flag, you shouldn’t be buying from this person.
Many people get scammed because they are NOT doing this.
This process ties into the one of verifying the authenticity of the watch.
I go way deeper into the micro-tactics and different strategies inside Watch Trading Academy.
But even this part taken directly from WTA makes a HUGE difference in reducing the risk on your part.
With that being said…
If you are ready to learn more in-depth strategies and all the little gimmicks I have not presented here (I even have a video recognizing the authenticity of a watch just from photos)…